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Sotheby’s Chinese, Indian Art Sale Bombs in Wake of Wall St. Crisis

Posted by: Frederik Balfour on October 05, 2008

While much of Hong Kong hunkered down just hours before the arrival of the umpteenth typhoon of this summer on Saturday , those who attended Sotheby’s prestigious Modern and Contemporary Asian Art night auction witnessed first hand the buffeting effects of the financial storm on Wall Street. Of the 47 works that went under the hammer, more than 40% of the pieces went unsold. What’s more, earnings for Sotheby, including auctioneer’s commission known as “buyer’s premium,” was a paltry $15 million, accounting for just 41% of Sotheby’s estimated takings for the night. Among the biggest upsets were the unsold work by India’s hot-selling artist Subodh Gupta [Untitled, estimated price $1.55 million to $2.05 million] and Chinese cynical realist painter Liu Wei’s The Revolutionary Family Series [Triptych] which failed to find a bidder willing to meet the $1.55 million suggested minimum.

As the weather deteriorated Sunday morning, so did things in the auction hall. Only 39 out of 110 paintings from the 20th Century Chinese Art Sale found buyers, while 71 will have to be packed up and shipped back to their sellers. By the time I arrived for the afternoon session, the usual buzz I’d come to expect at Hong Kong’s contemporary Chinese art auctions was sorely absent. At one point during the sale, the auctioneer mistook a woman covering her mouth to stifle a yawn for her wishing to bid, prompting a valiant attempt to inject some levity into the proceedings as he asked if “anyone else is yawning in the room.”

Yawns gave way to disbelief a little later, at least for me, when two works by white hot Chinese artist Zhang Xiaogang went unsold. That’s a huge reversal for the Beijing-based artist whose paintings have routinely fetched prices for millions of dollars, well in excess of auction estimates. Yue Minjun and Zeng Fanzhi, two other of the hottest selling Chinese contemporary artists did manage to sell, although well within the estimates.

You connect the dots. Wall Street goes into meltdown, and Sotheby’s auction bombs in Hong Kong. There’s got to be some connection, right? Well, not the way Kevin Ching, Sotheby’s CEO for Asia spun it to me. “I hope there is no immediate direct correlation between the financial market and the art market,” he says, pointing to the widely successful auction of enfant terrible Damien Hirst’s works in London within days of Lehman’s going bust. “Auction houses including ourselves, we avoid talking about art as an investment and even less so of using art as a vehicle for speculation,” he adds.

I think recent history suggests otherwise, at least where Chinese contemporary art is concerned. A huge amount of buying has been fueled by investment bankers and hedge fund managers who helped push prices up exponentially for several years. But aren’t auction houses partly to blame for the run-up in prices too, I ask? “All I can say, we basically sell objects which are demanded, where there is a demand, and we sell them at what we consider the market prices at the time. But when we have consignors who want aggressive estimates over and above what market can accept they would have to occasionally accept the consequences, and I think that’s what happened here last night,” Ching explains.

I admire him for trying to put the best face on the lousy sales, and to be fair, a couple of Indonesian artists, including I Nyoman Masriadi, set new world record for a Southeast Asian artist with a painting that went for $620,000, about 12 times the high estimate. But Ching agrees that it’s high time that prices for Chinese contemporary artists started to fall back to earth.

I also have to give him credit for some creative ambush marketing by agreeing to host a charity auction of works commissioned by Olympic Sponsor Adidas based on, guess what? The theme of sports. I caught most of that sale, too, and I can only tell you that an auction room nine tenths empty is not my favorite place to spend part of a Sunday evening. I don’t know yet how much money was raised, the proceeds to go to building sports facilities for kids who survived the Sichuan Earthquake, but I think that as a charitable exercise, it was somewhat flawed. Serious art collectors didn’t show up for the sale, which meant that the two works by Chinese artist Tang Zhigang that were expected to raise about $750,000 combined, went unsold. Works by David Beckham, Russian Olympic pole-vaulter Yelena Isinbayeva, Australian swimmer Michael Thorpe and U.S. 400 meter sprinter Jeremy Wariner also failed to sell, despite asking prices of between $6,500 and $10,000. But after seeing these paintings, all I can say is, “Guys, please don’t quit your day jobs.”

For his part, Ching says the exercise was extremely worthwhile. “For us it’s fantastic marketing. Sotheby’s is known not just to our clientele, but to their [Adidas] network. And in presale exhibitions in China, our name was associated with the Olympics.”

Southeast Asian Art Sale a Boom
*Oct 6 UPDATE*

What a difference a day makes. The mood was positively ebullient at Sotheby’s on Monday as buyers crammed the room and Sotheby’s employees manned the phones to handle the enthusiastic overseas bidding. The reason for this sea change in sentiment? Well for one thing, today’s auction of Southeast Asian Contemporary Paintings was far more affordable than the works from China and India on sale during the weekend, and collectors seem to have finally cottoned onto the notion that Indonesian, Vietnamese and Filipine artists represent opportunities to own some great art.

At the top end of the market, the name on everyone’s lips today was I Nyoman Masriadi. He had already set a record on Saturday when his huge canvas featuring Batman and Superman sitting on adjacent toilets sold for $620,000. But he broke his own record today with a painting of boxers that seems part Botero, part Leger, which fetched a whopping $833,000. A bit later, during furious bidding for yet another Masriadi, the auctioneer even exclaimed “this is really, really fun,” and the room broke into applause when the work finally sold for a very respectable $307,000.

Filipino artists also made a strong showing. One work by up and coming painter Geraldine Javier sold for $32,000, more than three times the high estimate. An intimate portrait of a woman and child by Vietnamese painter Mai Trung Thu also sold for triple the estimate, fetching $23,000.

Related story
: Pop Goes the Bubble in Chinese & Indian Art

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Harry Cymer

October 6, 2008 05:49 AM


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BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.

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